Marketing Feature: Beyond employee engagement

Douglas Reid, Associate Professor of International Business and Strategy at Queen’s School of Business, led a great session on Employee Engagement at the Best Managed Symposium for Canada’s Best Managed Program. Read what this Distinguished Faculty Teaching Fellow in Strategy had to say on a topic that is often underestimated in terms of its impact on performance.

What is an Engagement Culture?

You have employee engagement when you are able to generate real attention, focus and productivity in

Your Organization: Being engaged demands individual discretionary effort. Wouldn’t it be great to work in a place where everyone puts in that little bit of extra effort, going the extra distance?

An engaged culture survives on:

Rewards — most often praise or recognition, as a financial reward is a well-known demotivator

Cooperation

An organizational purpose that goes beyond just making money

A sense of mutual obligation

Being engaged in your workplace means that you look forward to going to work in the morning, you have a life outside of the office, and feel that your work matters.

The cost of hiring and training people is significant, whereby there is a definite economic advantage in ensuring employees are engaged. This is a choice that could make a claim on scarce monetary resources or simply the use of valuable time. Hence the activities that promote engagement are not necessarily “free” and are best approached from perspectives of optimality and efficiency. Given that a company seeks to generate wealth, the management task is finding the right amount of engagement given what it costs. More may be desirable but may not be affordable.

Does engagement guarantee growth?

Engagement is a necessary but not sufficient condition for corporate survival and growth. It will help a company be more innovative, but engagement alone is not enough to guarantee growth. However, engagement is a strong predictor of greater corporate resilience — meaning that after difficult times, a company rebounds faster and more reliably.

How can we “do” differently with less?

Doing differently with less means being open to new and novel combinations of company resources. In practice this means reallocating at least one of the three critical corporate resources to a different use, or applying it in a new way. The three resources are:

Money — This includes brands, equipment, IP, licenses, machinery, information — and cash, of course. In general, “money” includes every non-human asset of an organization that a manager can deploy.

People — Organizations are good at counting heads but not so good at creating an inventory of skills. However, customers don’t care how many people work for you, but do care deeply about whether your skills are right for the problem they’ve hired you to solve.

Time —Think of this as the duration, sequence and project choices to which you apply the money and people that you have. Making such choices is the purest form of managerial judgment.

One way to think of strategy is the set of necessarily creative choices that a manager makes to reach targets with the inputs that he/she has at hand. Rarely will anyone have enough resources to meet targets. However, shortages are well-known drivers of creative responses and breakthroughs.

The actions of an engagement-focused company build, over time, a culture that can be described in a single word: we. “We” reflects a shared sense of purpose, an affiliation with peers that exists independent of rank and a culture where extra effort is a sign of belonging.

Companies with a ‘we’ culture often outperform consistently

Southwest Airlines has one of the strongest “we” cultures in business. When hiring for a flight attendant position, consider what Southwest considers normal practice — and imagine how this reinforces their culture:

Conducts 13 to 14 interviews — a substantial number by the standards of most companies.

Half or more of the interviews are done by serving flight attendants, to see if the prospect would be a good fit with existing staff.

Won’t hesitate to scratch a prospect at the final interview if the fit is not good, because they know that avoiding a bad hire is far less costly than treating the sunk cost of an interview as an obligation to proceed.

Important fact: Southwest is the only airline that over 30 years, has only lost money in ONE financial quarter; every other quarter, they were profitable.

Other steps towards employee engagement include:

Ensure that your employees have enough autonomy, i.e. enough discretion to act within the scope of their position.

Encourage your employees to manifest the human desire for mastery at work, through openness to changes in job structure, work processes, and investment in their development.

Your employees must feel that their work brings them meaning. Think of meaning as the reasons an employee gives his or her family for why the work they do matters.

Cooperation in pursuit of a shared goal is a mission-critical trait that management has to reinforce at every opportunity.

Finally, the word “employee” describes what is primarily an economic relationship. High engagement companies think of the people who work there more as members, than as costs.

People need to feel secure that if they try and fail they will not be reprimanded; a culture of blame does not work. Worse, it kills innovation.

You can make a difference

If you don’t have an engagement culture in your organization and you are working on implementing one, you will be making a series of interconnected changes.

Fortunately, most managers underestimate the desire for constructive change within their companies. Change researchers, including some at Queen’s School of Business, have found that employee disposition towards change is often far more accommodating than most managers believe to be the case.

20% of employees want and encourage change — because they know something isn’t working and they are looking for improvement.

10% resist change — mostly out of fear of losing status, or appearing foolish at work if the change drastically alters routines of work to which they’ve adapted well.

70% will be neutral — they are waiting to see if the proposed change is serious — does management have the courage to carry it through — or is it “the flavour of the month”?

Change expert John Kotter suggested that smart managers structure change programs so as to produce early wins, which then become evidence for endorsement. The aim should be to move some 20% of the neutral employees to change-positive status — fast. Momentum will do the rest.

The essential questions of change are:

Which of our company’s habits are we really prepared to change, permanently and forever?

Which lifestyle changes are we really prepared to make?

How to get to an Engagement Culture?

Develop an engagement strategy in your organization – one that is endorsed by senior management, and one that is provided with the resources required for it to work. Especially critical: the time to communicate. Be sure that you are only proceeding if you intend to stick with this initiative.

Begin with purpose. Start conversations with employees about the worth of the work – beyond creating value for shareholders.

Ask how things could be done better. Be open to any suggestion. Better yet – for a given outcome, let employee groups tackle and resolve areas where you know you can do better.

Move to team-based rewards. These create the right incentive for individual cooperation. Don’t worry about loafing – teams will identify and handle underperformers.

Adopt a very strong “in the moment” performance management mindset. Immediately affirm acts that are within the new culture that is being formed; make the “culture carriers” the base of the new and improved company.

Put employees first, customers second, and shareholders third – like Southwest Airlines does – and act accordingly. The rationale is logical: if employees are engaged, customers will be happy. If customers are happy, shareholders reap the benefits.

Opportunities of Engagement

Engagement isn’t happiness. It’s far more important than that. What engagement does produce is innovation and lower costs – these are the real ingredients of contemporary competitive advantage. If you want to learn more on how to better engage your employees, contact us Queen’s Executive Development Centre at www.execdev.com / 1.888.393.2338 or Deloitte.